On January 1, 2010, Chester Company acquired machinery at a cost of $60, 000.This machinery was being depreciated by the double-declining-balance method over an estimated life of five years with no salvage value.At the beginning of 2012, Chester changed to and could justify straight-line depreciation.Chester's tax rate is 30 percent.The depreciation expense to be included in 2012 net income was
A)$ 7, 200
B)$12, 000
C)$14, 400
D)$36, 000

Question

Quizplus · Accepted Answer

The book value at the beginning of 2012 is $21,600. Using straight-line depreciation over the remaining 3 years, the annual depreciation expense is $7,200.

On January 1, 2010, Chester Company Acquired Machinery at a Cost